Luke Flanagan (Roscommon-South Leitrim, Independent) | Oireachtas source

I am sharing time with Deputies Mick Wallace, Stephen S. Donnelly and John Halligan.

I welcome this important Bill which is being introduced at a pivotal time for the country. Ireland needs a strong and resilient credit union movement that is fit for purpose. The movement has been helping people for over 50 years. Credit unions have weathered the financial crisis much better than other financial institutions, which has not been by accident. By and large, they have acted in a prudent manner and in keeping with their ethos of existing not for profit but for service.

Credit unions set up their own savings protection scheme in the late 1980s to ensure that, when the wet day came, the movement would be protected and secure from the storm. Credit unions, unlike other financial institutions, are well catered for in bad debt provisions.

Credit unions use a standard simple calculation for bad debt provision which in general has worked out very well.

The people need options for their financial services. The credit unions have provided a safe place to save and borrow at reasonable rates. They have supported communities throughout the country via lending, sponsorship and organising events for the communities in which they work. They want to progress. They must progress for the good of the country. They want to help out more.

The country needs an alternative to the two pillar banks in the area of personal finance and financial services. The stumbling block for credit unions to filling that space is their lack of access to the Irish payment services clearing system. Credit unions must offer electronically enabled payment accounts to their members. We have talked about that for the past number of years. The commission report rightly acknowledges that requirement. That is the future. The time to deliver on this aspect is now. Increasingly, we are moving towards a cashless society with the phasing out of cheque payments by 2016, the increased usage of debit and credit cards, and electronic fund transfers. A way must be found to provide the credit union movement with access to the clearing system at an affordable price which could be set to take account of the cost of the service provision. Legislation alone will not achieve the required outcome. The goodwill of all stakeholders must come to the fore.

As I listened to the apology from the Minister, Deputy Ruairí Quinn, for the delay in processing student grants I wondered where all those students will go, what we will do for them and if they would have to drop out. Many of them probably sought finance from the credit unions. The Minister can help in that regard. He can arrange the grant payments to be mandated to the credit unions.

Regarding social finance, this is a great opportunity to allow credit unions lend out some of their excess funds through a carefully structured, safe and secure process, that is, funds made available to the National Treasury Management Agency, local authorities and housing projects. I fully support allowing credit unions lend to State guaranteed projects which have a social benefit. That has the potential to allow up to €6 billion of capital projects to progress. That would provide a huge number of jobs and a boost to the economy. That is something the Minister must seriously consider.

I do not agree that the term limits will undermine volunteerism in the credit union movement. This might not be popular with some people but I have got information from a variety of different organisations. I was elected here to make up my own mind and that is what I have done. An example is that a member can be a director for nine years, spend three years mentoring new directors thereby ensuring the future of volunteering, spend three years on any of the crucial committees, that is, credit control or nominations and then revert to the board if they so wish. That rotation of positions will be very positive for the movement. Term limits are good governance. Governance is vital for the future. It relates to the separation of responsibilities and internal controls. The separation of policy and operations is a basic fundamental of governance. The introduction of the internal audit function, risk management and compliance will further improve the governance of the movement.

I reiterate that Ireland needs a strong, resilient and fit for purpose credit union movement. We must ensure that this legislation enables the movement to progress into the future.

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